ECON7200
ECONOMICS OF FINANCIAL MARKETS HOMEWORK ASSIGNMENT
ECON7200代写 Use the Turnitin submission link provided. Please submit in a single Word/pdf You can either type or write and scan your…
Instruction: ECON7200代写
- Use the Turnitin submission link provided.
- Please submit in a single Word/pdf
- You can either type or write and scan your answer for parts A and
- You need to type for part C (essay) as it must be checked for
- If you encounter any problems, please email econ7200@uq.edu.au.
PART A: MULTIPLE CHOICE QUESTIONS ECON7200代写
Each Question is worth 1 mark (15 Marks Total)
- Compared to an economy thatuses a medium of exchange, in a barter economy,
A.transactioncosts are
B.transactioncosts are
C.liquidity costs are
D.liquidity costs are
- A financial crisis occurs when an increase in asymmetric information from a disruption in thefinancial system
A.causes severe adverse selection and moral hazard problems that make financial marketsincapable of channeling funds efficiently.
B.allows fora more efficient use of
C.increaseseconomic
D.reduces uncertainty in the economy and increases market
- Abond with default risk will always have a risk premium and an increase in its default risk will the risk premium.
A.positive;raise
B.positive;lower
C.negative;raise
D.negative;lower
- Moral hazard is an important concern of insurance arrangements because the existence ofinsurance
A.isa hindrance to efficient risk
B.causesthe private cost of the insured activity to
C.createsan adverse selection problem but no moral hazard problem.
D.providesincreased incentives for risk taking.
- Financial markets havethe basic function of
A.getting people with funds to lend together with people who want to borrow funds.
B.assuring that the swings in the business cycle are less pronounced.
C.assuring that governments need never resort to printing money.
D.providing a risk-freerepository of spending power.
- Theprincipal-agent problem would not occur if of a firm had complete information about actions of the .
A.managers;customers
B.managers;owners
C.owners;managers
D.owners;customers
- Ifa $1000 face value coupon bond has a coupon rate of 75 percent, then the coupon payment every year is
A.$37.50.
B.$3.75.
C.$375.00.
D.$13.75
-
Thequantity of reserves supplied equals
A.required reserves plus borrowed
B.total reserves minus required reserves.
C.non borrowed reservesminus borrowed
D.non borrowedreserves plus borrowed
- Factorsthat can cause the supply curve for bonds to shift to the right include
A.an expansion in overall economic activity.
B.a decrease in expected inflation.
C.a decrease in government deficits.
D.a business cycle recession.
- A substantial decrease in the aggregate price level that reduces firms’ net worth may stall arecovery from a This process is called
A.moral hazard.
B.insolvency.
C.adverse selection.
D.debt deflation.
- Networth can perform a similar role to ECON7200代写
A.diversification.
B.collateral.
C.intermediation.
D.economiesof .
- Thepresent value of an expected future payment _ as the interest rate
A.falls
B.rises
C.is constant
D.isunaffected
- If the amount payable in two years is $2420 for a simple loan at 10 percent interest, the loanamount is
A.$1000.
B.$1210.
C.$2000.
D.$2200.
- Because of theadverse selection problem
A.good credit risks are more likely to seek loans causing lenders to make a disproportionateamount of loans to good credit risks.
B.lenders may refuse loans to individuals with high net worth, because of their greater proclivity to”skip town.”
C.lenderswill write debt contracts that restrict certain activities of borrowers.
D.lendersare reluctant to make loans that are not secured by collateral.
- The total collection ofpieces of property that serve to store value is a person’s
A.income.
B.money.
C.wealth.
D.credit.
PART B: SHORT-ANSWER/CALCULATION QUESTION
Answer ALL questions. Questions carry marks as indicated. (35 Marks Total) Show ALL workings. Give your numerical answers to two decimal places.
B1. (15 marks)
Using graphs of the market for reserves, explain and indicate what happens to the cash rate, borrowed reserves, and nonborrowed reserves in the following situations, holding everything else constant. Note that different starting positions of the graph can result in different results; your answer must cover all potential scenarios.
(a).Abig bank has just failed, and many commercial banks are expecting a potential bank panic.
(5 marks)
(b).The public increases spending as a result of the end-of-financial-year sale, but the RBA wants tokeep the cash rate constant.
(10 marks)
B2. (8 marks) ECON7200代写
Using both the supply and demand for bonds and the liquidity preference framework, show how interest rates are affected when expected inflation increases. Provide labelled graphs to support your answers. Are the results the same in the two frameworks?
B3. (12 marks)
Suppose that the required reserve ratio is 15%, currency in circulation is $1000 billion, the currency deposit ratio is 0.5, and total reserves are $600 billion.
(a).Calculatethe excess reserve ratio, the money supply, and the money multiplier.
(6 marks)
(b).Suppose the Central Bank conducts an unusually large open market sale of bonds to commercialbanks of $ 200 billion to prick an ongoing housing bubble. Assuming the ratios you calculated in part (a) remain the same, predict the change of the money supply, and the resulting money supply in the market after the sale.
(6 marks)
PART C – ESSAY (50 Marks) ECON7200代写
Please TYPE your answer for this part, as it will be checked for plagiarism.
Read the article:
- Yellen, J. L. (2009). A view of the economic crisis and the Federal Reserve’s response. FRBSFEconomic Letter, 2009,
Write an essay (with a proper introduction and conclusion), between 600 and 1000 words, that answers the following tasks:
a.(10marks) Summarize the
b.(10marks) Explain how the Global Saving Glut could have contributed to the
c.(20marks) In your opinion, do you think the Fed’s response during the GFC was appropriate, and if not, what could have been done better?
Writing quality of your essay (including grammar, organization, clarity and references) will also be assessed (10 marks).
